Month: July 2017

With older Americans increasingly responsible for their own financial security, workers are becoming steadily more pessimistic about their future economic prospects as they approach retirement age, according to a study by United Income, a startup that aims to apply big-data analysis to financial planning.

But instead of working longer, some are finding that they can still fulfill their retirement dreams with a move abroad, according to Dan Prescher, a senior editor at International Living.

World’s Best Places to Retire

Malta

Portugal

Nicaragua

Spain

Malaysia

Colombia

Costa Rica

Ecuador

Panama

Mexico

Source: International Living

“Especially over the last decade, a lot more people are doing it — it’s not a foreign concept anymore,” he said.

“Outside the U.S., the cost of living can be half what it is in the States, especially in regards to health care,” Prescher said. (For example, Numbeo.com’s latest Cost of Living Index Rate listing ranks Puerto Vallarta, Mexico at 37.12 on its scale, with New York City being 100; Columbus, Ohio coming in at 72.12; and Reno, Nevada, at 61.75.)

However, “you have to have a sense of adventure,” Prescher added. “These are different cultures, languages, economies,” he said. “If you don’t like challenging yourself like that, you won’t have a good time.”

Each year, International Living publishes a short list of the best countries in which to retire. Called the Annual Global Retirement Index, the list takes into consideration factors such as health care, cost of living and climate, and then calculates a final score for each country.

For his part, Prescher — although not yet retired — is currently living with his wife in Guadalajara, Mexico. He said he moved in part for the adventure but also “to check out for ourselves the options we’d eventually have when we retired.”

“There is simply no way we could have both retired this early in the States,” says Florida-native Paul Kurtzweil, 45, who along with his wife Linda, 43, retired to Mexico in 2015. “Moving to Akumal made it all possible, and we couldn’t be happier. Now we can focus on enjoying our retirement with zero debt, while living on the Caribbean. Not bad!”

Paul and Linda are not alone in bucking the trend revealed by the latest U.S. Jobs report. According to the report, more Americans are working past the traditional retirement age of 65 and the Bureau of Labor Statistics expects 36% of 65- to 69-year-olds will be active participants in the labor market by 2024. But some folks are taking a different approach to the retirement crisis. Editors at International Living say they have seen an increase in the number of people like Linda and Paul looking into early retirement overseas.

“The idea of retiring overseas has definitely become more mainstream over the years,” says IL Executive Editor, Jennifer Stevens. “When International Living first started publishing in 1979, the idea was pretty far out of the box. But over the last five years or so we’ve seen more people coming to our conferences, visiting our website, and subscribing to our magazine for information about how to live better for less overseas.

“Our correspondents are meeting many of these people in person too, in all of the countries we cover. There does seem to be a sizeable number of people who are doing anything but postponing retirement. In fact, they have found that thanks to lower costs and high-quality lifestyles in all sorts of overseas locales, they can enjoy a long and fulfilling retirement.”

Paul retired from law enforcement after 25 years, and Linda worked in child welfare management, “both high-stress jobs,” says Paul. “We are both planners, so the decision to end up in Mexico didn’t happen by accident. We spent several years looking at all our options, including a total of over 30 trips to Mexico.

“When I retired, Linda couldn’t retire just yet, at least not if we stayed in the U.S. After we crunched the numbers, we realized that one or both of us would have to continue to work, foregoing retirement, to sustain our lifestyle. So, we decided to get serious about moving abroad…finding a place with a lower cost of living that would meet all our other requirements,” Paul says. “We made the decision to move to Mexico and knew that would be the key to living well and retiring while we were still young.”

Connie Pombo and her husband, Mark, also refused to delay retirement. “We were young retirees, aged 55, when my husband and I retired to Ecuador in 2010. In those early “Gold Rush Days,” we were actually considered too young to retire (if there is such a thing) as all of the friends we met in our new home were in their 60s and 70s. At that time, we didn’t fit in very well until the word got out that Cuenca was the “top retirement haven” and a new generation of retirees joined us—many of whom were in their late 30s and 40s.

“I will never regret our decision to retire early. It saved us emotionally and physically as we were on an economic “death row” with an oversized mortgage, two car payments, and ever-increasing medical premiums with outrageous deductibles that left us sleepless most nights.”

“For seven years, we haven’t had to worry about how we’re going to pay the mortgage; answer to our bosses’ outrageous demands for more hours and less pay; endure long, cold winters; or survive two-hour commutes in cars that were owned by the bank. Instead we’ve been enjoying the good life.”

“We’ve lived on the same budget for the past seven years ($1,317 a month), as we own our condo. Mark and I are able to live a comfortable lifestyle at a fraction of what it would cost in the States. And in less than a month, we’re giving ourselves a ‘raise’ when we are finally eligible for our Social Security checks. In the States, it wouldn’t be a big deal—we’d just be scraping by—but in Ecuador our “modest raise” is equivalent to winning the lottery.”

Janet Hitchens, a former nurse, and her husband John, a retired investor, first went to Santa Fe, Panama, to explore. “We both retired early,” says Janet. “We were looking for adventure, for something a little different. We were intrigued by Panama because it had a stable democracy and was easy to get to from the States. So, we arrived here in November 2005, without a word of Spanish, and decided to travel around for six months.

“I’m never bored here, but Santa Fe is for active retirees,” says Janet. “It’s for people who like hiking to discover new waterfalls and enjoying a potluck lunch with friends at the end of it, rather than going out to a fancy restaurant.

“Everyone who comes here reinvents themselves. Now my passion is travel. And Panama is a great hub to travel from. We’ve been to Peru recently, and with our pensionado [retirement] visa I was able to get round-trip tickets to the Caribbean island of Curaçao for only $230.”

“When people retire overseas they suddenly find they have more money left over for travel, to indulge themselves. They are essentially trading up,” says Stevens. And it’s not just in Latin America. Californian Tricia Pimental and her husband, Keith found they could trade up and retire early by moving to Portugal. “Keith and I immediately saw our expenses fall to between one-third and one-quarter of what they were back in the U.S. The truth is, almost everything in Portugal is less expensive. “

So many people look forward to retiring. But the exuberance of the day you don’t have to work can be accompanied by a lot of anxiety.

Have I saved enough for retirement?

This question about financial security can overwhelm a lot of folks. I know it concerns me, and I’ve been saving for retirement since my early 20s.

Joining me last week for my online discussion was Jean C. Setzfand, senior vice president of AARP programs that address health, wealth and personal enrichment issues for consumers 50 and over. The questions came fast and furious during the chat, so Setzfand agreed to answer some in offline.

Q: My wife and I have about $1.5 million saved for retirement. She is already retired and receiving a pension of $48,000 per year. I am planning on leaving my job at the end of this year. We also own a small business that gives us about $25,000 clear per year. I may decide to work part-time initially, but not sure yet. She is a little worried that we don’t have enough yet to retire. What are your thoughts about our situation?

Setzfand: You and your wife sound like great financial planners. I think it’s wise for you to ask the question even if you’ve done your homework and saved for retirement. You are the best judge for what’s enough, but some of the questions you may want to consider are:

— What’s your plan in retirement and consider the near-term (5 to 10 years) AND the longer-term (20 to 30 years)? If you have a clear view on your lifestyle, you’ll have a better sense for the expenses (costs) required to support that life. Also, don’t forget to factor in where you will be spending your retirement as cost of living expenses can vary by location!

— As you consider your lifestyle, don’t forget to budget for health-care and long-term care expenses. Most people overlook the out-of-pocket health expenses, which really adds up (estimated at $250,000 for a 65 year old couple) and that doesn’t include long-term care costs.

— Your wife is fortunate to have a pension. Most folks today can only rely on Social Security as their sole source of a guaranteed lifetime income. So your decision on when to claim Social Security is also critical. Each year you delay will earn you roughly 8 percent more in income. The difference between claiming at 62 vs. 70 is roughly 75 percent (e.g., benefit at 62 is $750 vs. benefit at 70 $1,350). This amount is locked in for the rest of your life, so the difference does add up!

AARP has some easy to use calculators to help you run the numbers once again.

Singletary: This first question really caught my attention. Here’s a couple with more than a million dollars saved for retirement, and they still don’t feel secure.

But for those of you who have saved a lot of money — and $1.2 million is a lot — here’s some perspective. “According to a report from the Economic Policy Institute, the mean retirement savings of all working-age families, which the EPI defines as those between 32 and 61 years old, is $95,776,” reported Kathleen Elkins for CNBC.

Q: I am 66 years old and have Medicare, a supplemental policy, and a prescription policy. I am really happy with the lower premiums I am now paying compared to what I was paying before Medicare. Do you see any drastic changes in Medicare for seniors who already are on Medicare?

Setzfand: AARP is concerned with changes proposed in the Senate Health Care Bill. We strongly oppose any changes to current law that could result in cuts to benefits, increased costs or reduced coverage for older Americans. We are dismayed that — given Medicare’s long-term financial challenges — the Better Care Reconciliation Act of 2017 (BCRA) cuts a funding source that strengthens Medicare’s fiscal outlook, the additional 0.9 percent payroll tax on higher-income workers. Repealing this provision would cut Medicare funding by $58.6 billion, would hasten the insolvency of Medicare Part A by up to 2 years, and diminish Medicare’s ability to pay for services in the future.

Older Americans use prescription drugs more than any other segment of the U.S. population, typically on a chronic basis. As we look at ways to lower health care costs in this country, we believe that Congress must do more to reduce the burden of high prescription drug costs on consumers and taxpayers. Rather than address costs, BCRA simply repeals the fee on manufacturers and importers of branded prescription drugs. This repeal removes $25.7 billion from the Medicare Part B trust fund between 2017 and 2026, and leads directly to higher Medicare Part B premiums.

Q: I am 41 now with a military retirement and disability that brings me in $6,600 a month. I also have a federal job that I contribute the max into my retirement. (My organization also has a retirement plan they contribute to based on my salary. Also with my disability, once I stop working I can draw Social Security.) So my question is will that be enough for retirement?

Setzfand: Sounds like you’re on the right track! Here are some considerations for you to think about since I don’t have a complete picture of your situation.

When do you plan on ‘retiring’?

Your income may take a dip (even if your disability allows you to draw on Social Security sooner); and

The sooner you retire, the longer length of time you need to support in retirement

What will your lifestyle be in ‘retirement’? Will you have a higher expense base or lower?

If you relocate, you’ll want to think about the specific location so you can estimate your cost of living.

Sharing your story might help others. So send your comments to colorofmoney@washpost.com. Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”

Steve Katz of Falls Church, Va., has a question for you savers out there faithfully squirreling away money for retirement.

“I recently turned 50, have what I believe to be a reasonably decent amount saved for retirement but also face some significant insecurity regarding my current (well-paying) gig,” Katz wrote. “I am also in good health and single with no kids. I am consequently struggling with wanting to be ‘the ant’ and save enough for retirement but also worry about getting to my 60s and regretting not having done more when I was younger and had the money. So in a sense I think I am asking if you’ve heard from anyone saying they have ‘grasshopper regret,’ i.e. they were so focused on savings they didn’t do things — which cost money — when they were younger but now can’t because of age/infirmity?”

I’d like to hear from the grasshoppers, too.

Any regrets on saving and missing out on some fun? Send your comments to colorofmoney@washpost.com.

Retirement bloggers

I believe that wealth happens intentionally and that means for me reading as much as I can about all things financial, especially retirement.

In this section of the newsletter is devoted to postings from retirement blogs. Got a favorite blog or specific posting let me know.

Timothy Wolfe from New Mexico said he’s a big fan of The White Coat Investor, which is written by Dr. Jim Dahle, an emergency physician who decided to take his financial future into his own hands.

Wolfe recommends this recent post: How To Learn About Mutual Funds

I asked Wolfe why he liked this particular blog.

It “caters to my demographic — professionals with higher income than the societal average, but not high enough to not have to think about money (primarily doctors, but he’s acknowledged a broader professional audience),” he said. “I think that group sometimes gets lost in between financial advice for people with lower income or more dire situations, and people with such significant wealth that they don’t really need to stress about retirement so much as not mess up an already good thing.”

You probably dream about the day you can let the stress of work go and be fully retired. Building wealth is a marathon financial event, and there are plenty of tempting distractions and necessities along the way. Here are some behaviors and actions that will help you reach financial independence sooner.

Start investing early. Time is your greatest advantage when it comes to building wealth for the future. When you are young and have 30 to 40 years before retirement, even a small amount of savings has the time to grow and multiply with the power of compounding interest. The younger you are when you start investing your money in a retirement savings account, the more time it has to work on your behalf. Maximize the power of compounding interest by beginning to save in your 20s. Let your money work for you so that you can get away from relying on income that you generate with your hands, back and brain.

Set specific financial goals. Setting goals can help motivate you to achieve them. Take the time to intentionally set goals for your finances. You don’t want to live in reaction to your financial situation; you should be in control of it.

Live below your means. Excessive debt has no place in a financially successful life. It’s better to be debt-free or well on your way to paying down your debts as quickly as possible. Living below your means often requires short-term sacrifices in order to reap long-term financial rewards. That means you don’t carry credit card balances, aren’t paying a car loan and you don’t finance a new flat screen television, just to cite a few examples.

Defer gratification. The combination of setting financial goals and paying yourself first is a powerful discipline to master. This also means you defer gratification until you can afford the items you want with cash. You are willing to postpone a purchase until you have saved up enough money to cover its cost, in full, once the bill comes in.

Focus on your strengths. Your earning potential is linked to your ability to develop your strengths. No one can be an expert in everything. Some experts think it takes five years or 10,000 hours to master something. Invest in yourself and continue to learn, but also recognize when it makes sense to seek the guidance of a professional.

Find opportunity where others see challenges. Learn to see opportunity in the face of difficulties and challenges. For example, the darkest of times for financial markets may have the silver lining of providing the best opportunity to invest. Buying in when the market is low gives you an opportunity to sell much higher. Secure your finances in a way that leaves you available to observe and seize financial advantages when they present themselves.

Don’t make emotional decisions. When it comes to long-term investing, it’s never a good idea to make a financial decision based on fear or other emotions that cloud your ability to remain objective. Your financial plan should be logically determined, and then you need to be disciplined enough to stay the course.

Patience. Patience is key when it comes to long-term financial success. Don’t fall for “get rich quick” schemes. Give yourself time to evaluate each situation that arises with a clear perspective on how it impacts your life and finances, and carefully determine what should be done (if anything) to counteract any negative implications.

Prepare for the unthinkable. You need to take steps to protect the financial success you’re working so hard to achieve. Even though it’s an uncomfortable reality, you need to address all the major estate planning categories: health insurance, life insurance, disability insurance, car insurance, a living will/last will and testament and a healthcare proxy. You also should set up an emergency reserve of cash to cover three to six months of your living expenses just in case.

Generosity. Many people make a point to give money away to a church and other causes they care about. When you are intentional about where your money goes, you often find that you need less money than perhaps you thought and have extra to share that can have an impact in the lives of others. While there are tax benefits associated with generosity, the bigger reward is seeing your money help others.

These choices to live differently will be rewarded handsomely. It may start small with the desire to use this year to open a Roth IRA, fund your employer’s retirement plan to get the maximum match or trim your budget and live below your means. It all starts with a small sacrifice and a new habit, and then your assets begin to build upon themselves.

This will be the final article in a series of “Things you need to know before moving to Mexico: Adjusting to your new lifestyle”

In this segment we will be talking about adjusting to a new lifestyle after moving to Mexico. Saying goodbye to your old life and hello to a new chapter can sometimes take a little time. After finding a new home and settling in, getting familiar with your surroundings and meeting new people can be a bit frightening.

In the beginning, taking baby steps leads to long and very rewarding strides. Don’t be afraid to go out during the day and explore your new neighborhood. Try shopping at a few local markets for your fruits and vegetables. If you live in town, there are a variety of grocery stores to choose from and yes, there is a Walmart. Shopping is actually a great resource to find other expats roaming the aisles. Don’t be afraid to go up and nonchalantly introduce yourself as being new to the community.

When cruising up and down the streets of Playa del Carmen, walk into places like salons or barber shops and get a feel for the stylist. Check out several medical and dental offices and speak with the physician and dentist. It is always a good idea to establish a local doctor. Ask about their fee schedules and hours. Doing this is the norm in Mexico and is expected. Especially in a place like Playa, where there is an extremely large expat community that also had to adapt to a new lifestyle.

Some of the most likely places to meet people are the local cafes, restaurants and bar & grills. Even if you don’t indulge in adult spirits, just order up your favorite beverage and strike up a conversation with other North Americans. We have found that these types of establishments are an easy way to develop friends and/or casual acquaintances. You can also get online and find out where many of the North Americans or expats frequent. Another good way to get to know people is by joining a church. There are several around Playa del Carmen that worship in English.

If you participated with an organization like the Kiwanis, Rotary or other international clubs back in the states, then there are probably extensions of them here in Mexico as well. The ‘Seaside Rotary Club’ is a very active association and could be another way of meeting other transplants. Meeting people is the quickest way to get acclimated to the area and have it start to feel like you are part of the community. You might want to consider joining an expat lunch or dinner club. Go online and search social media sites like Facebook or Twitter for more information.

Getting to know the town of Playa del Carmen and its people really isn’t any different than doing the same thing back in the United States. The Mexican people are very friendly and willing to help in any way they can. It will be a little awkward in the beginning. You might at one time or another second guess your reasons for moving abroad. But when things do start to fall in place and you adapt to your new surroundings, you will wonder why you didn’t do this sooner. Choosing a new lifestyle is always a good idea!

My husband and I have lived in Cozumel, Mexico for the last three years. We moved for my husband’s job, but not in the way you might expect. He is a professional online poker player, a job he’s had since 2007. In 2011 the U.S. government shut down online poker, leaving professional players like Mike with the choice of either changing careers or leaving the country. Like many others, we became “poker refugees.”

We came via plane from our hometown, Auburn, Alabama. We’d never visited Cozumel before, unless you count driving around Google Street View, which we actually did quite a bit beforehand to get to know the place. Before we left the U.S., we put a few belongings in a small storage unit and gave away or sold the rest. Everything that we brought with us fit in our luggage. We also brought our two dogs, who came with us on the plane. (Incidentally, we have picked up a third dog while living here.)

We are on Mexican tourist visas, which is what everyone visiting Mexico gets. This type of visa does not allow us to legally get regular jobs here. We have to leave Mexico for at least 72 hours every six months to renew our visas. This requirement is almost never an issue because we visit family in the U.S. frequently and every year we go to an event in New Hampshire called the Porcupine Freedom Festival. We can renew the visas indefinitely, and we know people who have lived on tourist visas for many years.

Though moving here has had it’s challenges, it has been one of the best decisions we ever made. Here is my list of the top challenges and benefits of our move to Cozumel, Mexico.

Challenges of moving to Mexico

Miss family and friends in the U.S.

Financial support. It’s works best if you work online, are retired, etc. I’ve also seen people come here and start successful businesses.

Can’t find all my favorite products.

Isolation. I recommend coming with a partner or friend and/or connecting with other expats.

Delivery services not as good. They’re slower and a lot of things won’t ship to Mexico.

Can’t have guns.

Kinda hot.

Less prosperity around me. In general people here are poorer so stuff is not as fancy.

Benefits of moving to Mexico

Legal online poker.

Inexpensive Housing. We live in a much nicer place for less money since moving to Mexico. Our 2 bedroom/2 bathroom apartment is three blocks from the ocean and close to downtown for 6000 pesos ($356 USD at current rates) per month. Some friends recently stayed in Cozumel for a couple of months in a 1 bedroom/1 bathroom apartment two blocks from the ocean and even closer to downtown for 4500 pesos ($267 USD) a month.

Warm climate.

Great food.

Low Prices. If you are paid US wages and live like a Mexican local, you can save a lot of money.

Natural beauty. I love living near the ocean. We go snorkeling at least twice a week and we walk down to the ocean every evening for sunset.

The Mexican people. They are super nice and welcoming.

Mexican culture. It’s really fascinating.

Safer than living the U.S.

Simpler lifestyle. For example, we don’t have a car. We just walk everywhere or take a taxi for a couple dollars.

Caribbean water. When the sun is high in the sky, the water is the most bright blue and turquoise you’ve ever seen. It’s crystal clear, which makes you just want to jump right in.

Lenient immigration requirements. The governments of most countries make it hard to move there. For example, you basically have to be rich to move to Canada.

Opportunity to practice Spanish. But really only as much as you want to. You could get by in tourist towns like Cozumel with little or no Spanish because so many locals are bilingual.

Family and friends eager to visit. Who could blame them?

Safer from cops. Just by nature of being a tourist. We’ve had exactly zero police interactions in the three years since we moved here.

Visit home easily. Because Mexico is so close and there are plenty of flights.

Life is slower. As the locals say, it’s “tranquilo.”

Easy to get a bank account.

The Riviera Maya. Killer day trips or mini-vacations to places like Coba, Chichen Itza, Tulum.

Not exposed to U.S. media. There aren’t TVs everywhere with news pumping nonsense into your eyes and ears. You can keep up with it online, of course. Personally, I couldn’t pick Bernie Sanders out of lineup.

There are many factors that are making us age prematurely without any of us being aware of it, sorecognizing them is of vital importance in order to stay healthy. Chronic inflammation is a big factor for diseases such as diabetes, Alzheimer’s disease, cardiovascular diseases and cancer, which is why it needs to be resolved sooner rather than later. Here are 7 diseases and conditions that can make you age faster:

Sleep

Not getting enough rest overnight can really take a toll on our health. Not getting enough sleep can result in bad mood and grogginess, but it can also cause inflammation. Besides triggering inflammation, lack of sleep can harm your metabolism and weaken your immune system. According to studies, lack of sleep is also responsible for heart disease, asthma and allergies, which is why it needs to be resolved immediately. For best results, experts recommend sleeping 6-8 hours a day.

“Several studies have shown that both short and long sleeping times are associated with negative effects on our health. One meta-analysis showed that sleeping less than the recommended increases the risk of death for 10-12%, while another study revealed that oversleeping can increase the risk of mortality by 23-30%,” it was written in one study.

Allergies

Allergies are always a sign of inflammation – if they are severe, it means that you’re probably suffering from chronic inflammation. Experts recommend testing yourself for allergies in order to detect hidden allergies you might not be aware of.

Late retirement

Nowadays, it’s pretty common for people to retire later than they are required to. People go to retirement well into their 70s instead of their 60s, but according to one study, this has negative effects on our health.

“Retirement decreases the likelihood of being in very ‘good’ or ‘excellent’ health by about 40%. The study also found that retirement increases the probability of suffering from clinical depression by about 40%, while also increasing the probability of having at least one diagnosed condition by about 60%. Retirement also raises the probability of taking a drug for such a condition by about 60%,” the study said.

The trick to staying healthy is staying fit and physically active, but this doesn’t mean that you should keep your job. Travelling is a great way to stay fit both mentally and physically, and learning something new like a language or adopting new hobbies works just as well. Just keep your body and mind occupied and you will stay healthy.

Weight

Being overweight brings numerous health problems. It is linked to type 2 diabetes, high blood pressure, heart disease, stroke, sleep apnea, osteoarthritis, fatty liver disease, kidney disease and even cancer. However, being underweight can also cause problems, which is why you need to maintain a healthy weight.

“BMI doesn’t only reflect body fat, but muscle mass as well. If we want to continue to use BMI in health care and public health initiatives, we must realize that a robust and healthy individual is someone who has a reasonable amount of body fat and sufficient bone and muscle,” Dr. Ray, MD at the St. Michael’s Hospital says.

Headphones and speakers damage your hearing

You may not think much of it, but standing too close to speakers at concerts can damage your hearing and make you age faster. Listening to music through headphones can damage it as well – in order to protect your hearing, you need to listen to the music at a respectable level.

Loneliness

We aren’t designed to be lonely – loneliness only creates depression and stress, which can have a serious negative impact on your health. “Not only are we at the highest recorded rate of living alone across the entire century, but we’re at the highest recorded rates ever on the planet,” Tim Smith, a Brigham University psychologist says. According to the study, lonely people are 26% more at risk of death, which is why you should find a soulmate and hang out with your friends more.

Processed carbs and sugar

You probably know the expression “You are what you eat”. It’s true – the quality of food we eat has a profound impact on our health. Consuming junk, processed and sugary foods can harm your health, which is why these foods should be avoided. Besides making you gain weight, these foods also increase the risk of several serious ailments. Different foods metabolize differently in the body, but fresh foods work best. Eat a healthy diet focused on fresh fruit, vegetables and organic meat, and exercise at least 5 times a week to stay healthy and in shape.